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Tuesday, 14 May 2013

Century Iron’s stock on the rise after eResearch praises prospects

Century Iron Mines (TSE:FER) got a lift after eResearch reiterated Monday its speculative buy rating on the stock.

Analyst Bob Weir says the Toronto-based exploration firm has a compelling project portfolio, as well as ample cash to develop it.

Additionally, Weir sites a relatively near-term production timeline and two prominent Chinese investors as reasons for the rating.

Century Iron has a stake in four iron ore projects in Quebec. One of China’s leading steelmakers, Wuhan Iron and Steel, has about a 25 per cent stake in the company. China Minmetals’ interest is roughly five per cent. Century Iron and Wuhan have a joint venture to develop three projects.

Like other iron ore miners, Century Iron has faced floundering prices, but demand is picking up in Asia. Weir believes prices will have a long run until it reaches a peak in 2030.

Century Iron’s resource estimate has soared to 8.3 billion tonnes, making it one of the largest iron ore companies in Canada.

On Friday, the company announced it has filed a preliminary economic assessment for its Joyce Lake project. The net present value before tax is now $90.4 million.

eResearch has a 12-month $0.77 per share target on the stock and expects shares to reach $1.25 by the end of the summer.

The stock is currently trading at $0.425, slightly ahead of its 50-day moving average.